November 25, 2009
Deep Retrofits For Housing Efficiency

An Oak Ridge National Laboratory program to do deep retrofits of housing for energy efficiency comes up with an average $20k price tag. How can this pay itself back?

Deep energy retrofits are renovations to existing structures that use the latest in energy-efficient materials and technologies and result in significant energy reductions. Jeff Christian, the ORNL buildings technologies researcher heading the project, said at least 10 homes across the region will be sought to participate. The home selection process is yet to be finalized, and homeowners will have to pay most of the costs—about $10 per square foot of living space—and agree to allow their post-retrofit energy consumption to be monitored. But Christian said costs can be recovered in as little as 10 years, and energy bills potentially can be cut in half. Most important, data from the project can provide huge incentives for more deep retrofits across the region, he said.

So for a 2000 square foot house the total cost is $20,000. Any readers have a house about that big? How much are your yearly energy bills? I'm skeptical of a 10 year payback time for a retrofit that is so expensive. In fact, I went to a mortgage calculator, specified a 10 year, $20,000, 6% loan (too high or low?) and got a monthly payment rate of $222. Someone would to have a monthly average energy bill of $444 to cut in half with retrofits to pay it back in 10 years. Does anyone have an energy bill that large on a 2000 square foot house? Setting the payback time to 20 years the monthly payment comes out to $143. Got a monthly $286 average bill for electricity and natural gas or heating oil?

I wonder whether they include the solar panels mentioned below in this retrofit.

The retrofits are part of an energy-efficient systems approach that involves making the building more air-tight; weatherizing the attic, crawl space and windows; upgrading heating and cooling units, water heaters, appliances and lighting; and installing solar panels.

Oak Ridge is in Tennessee which can have some pretty hot summers. So they are looking for big savings from reworking how the house and attic get cooled. Got a big air conditioning bill?

Christian explained many new two-story houses have a heat pump for downstairs and another in the attic for upstairs. Much of the cost of cooling conventional houses comes from the unit in the hot attic operating very inefficiently. In a retrofit house, insulation is removed from the attic floor. The roof and sides of the attic are sealed with insulating foam, and a high-efficiency heat pump is installed in the attic. The result: huge energy savings in heating and cooling because the entire HVAC system is inside the insulation layer.

If you ever build a home from scratch then build it for high energy efficiency. Retrofitting is a lot more expensive.

Update: The 8 year payback time must be due to the subsidy paid by the taxpayers. As a few commenters point out, the rest of us pay for this. I'm with them in thinking this subsidy is a bad idea. Most of the energy savings can be had for a small portion of the total $20k cost. Think about that. Spend the same $20k over several houses and the total energy savings would be much larger.

If ORNL wanted to do something useful with taxpayers money about home energy efficiency they'd come up with methods everyone could use to analyse their house to determine what are the low hanging fruit.

Share |      Randall Parker, 2009 November 25 08:48 PM  Energy Heating

Isegoria said at November 26, 2009 5:56 AM:

When they say that costs can be recovered in as little as 10 years, they're (a) being optimistic, and (b) performing a financially unsophisticated payback period analysis, which ignores interest rates. Spending $20,000 today may save you as much as $2,000 per year, they claim, which would justify borrowing the money at 10 percent, if you thought the retrofits would last (and pay off) forever, or 0 percent, if you thought that they would last (and pay off) for just 10 years. (Lasting 20 years would imply a 7.75% return; 30 years would imply a 9.31% return.)

Bob Badour said at November 26, 2009 6:31 AM:

My house is about 2000 square feet. It is a drafty 115 year old farmhouse with little or no insulation. My heat (in Canada) and hot water averages to $250 per month (wood) or a not too different amount for heating oil. My electricity comes in somewhere near $150 per month. Adding in costs for servicing the furnace, putting up banking plastic, shrink-wrapping the windows etc. probably adds another $50 per month.

That all adds up to about $450 per month.

But looking at the things they are talking about doing, some of the biggest benefits would come from some of the cheapest interventions like insulating and sealing.

Randall Parker said at November 26, 2009 7:13 AM:

Bob, Yes I suspect they are including a lot of low return upgrades in with high return upgrades.

Do you use incandescent or fluorescent lights?

Any idea what your big electricity uses are?

Isegoria, The interesting thing here to me is that for some people this investment might even make sense. A lot of people do not know how to invest. If they put money in a bank their interest rate will be low and they'll even pay taxes on the interest. If they upgrade their house and expect to live in it for decades then it is a good deal for them. The upgrade retains its value in the face of inflation. The money saved is not money taxed.

In the US is interest paid on home equity loans tax deductible?

Jerry Martinson said at November 26, 2009 8:40 AM:

My neighbors have had utility bills over $500. One of them has that throughout the year. But it is on the system that the CA PUC forces PG&E to use which has "baseline" usage and then progressively higher marginal rates for going over baseline. So it's a bit of a perverted model that creates hyperincentives to save usage.

I insulated my house by blowing more cellulose in the attic (about $250+2 days my own labor) and sealing the crawlspace and insulating the perimeter walls ( about $300 + 2 days my own labor). I also redid the windows (about $10k) but my main motivation was that the windows where screwed up. I don't think the windows can pay for themselves but the 2 others have had a 1 year "payback". The crawlspace one had the highest- it reduced my heating bill by 30% - it's a shame so many houses in California have vented crawlspaces due to bad building codes; It really is the low-hanging fruit in the land of nuts. I use less than 50% the amount of natural gas of any of my neighbors.

Supposedly the other low hanging fruit is insulating the first several feet of hot water pipe coming from your hot water heater. This is especially true in California since the water heater is usually in the garage where it is unconditioned. It costs $2 and takes one minute to do. Payback is less than 6 months. It is amazing that it is not required when they install the water heater.

I use mostly compact florescent. We have a few halogens but it's 90% fluorescent. We use about 30% less electricity of our neighbors in identical houses due to this and having a gas dryer and front-loading washer (they spin more water out of the clothes so the dryer doesn't have to work as hard).

Dan said at November 26, 2009 8:56 AM:

If this includes solar, it may not be too far off. I just finished installing solar panels on my house in San Diego, and the payback time is down to 8 years due to subsidies, lots of sun, and the bizare electric rates here (~30 cents/kWh). Even with efficient lighting & appliances, a $200 electric bill is not uncommon.


Brett Bellmore said at November 26, 2009 9:55 AM:

Sounds plausible at recent propane costs in Michigan; A typical heating season my old house there would consume about $4000 of propane. Of course, that's with propane so expensive that simple resistance heating using regular electrical rates was cheaper; The compact fluorescents actually cost me money because their waste heat had to be replaced with more costly propane.

Bob Badour said at November 26, 2009 10:31 AM:

Most of my lights are fluorescent or CFL. I have a couple incandescents seldom used or on dimmers.

The basement lighting, which is all fluorescent, burns about 6kWh/day if left on. The increased use of the blower fan on the wood furnace and the circulating pump for the radiators in winter uses another 6kWh/day.

My minimum daily electric load is about 19kWh. I would say a third is lighting. The remainder comprises my electric stove for cooking, a circulation pump on the wood furnace that runs continuously, my water pump, and various electronic devices (computer, tv, dvd player etc.)

Engineer-Poet said at November 26, 2009 12:47 PM:

Brett, that's where a propane-fuelled engine-driven heat pump would be an improvement.

Randall Parker said at November 26, 2009 4:46 PM:


19 kwh * 30 days = 570 kwh. $150/570 kwh comes out to over 26 cents per kwh. That's expensive.


It never occurred to me before that a heat pump could run off of fossil fuels rather than electricity. But of course. Any idea on the efficiency and how to compare dollars per gallon of propane versus cents per kwh to choose between fuel-powered versus electric-powered heat pumps?


At least with SoCal Edison in Santa Barbara I never use so much electricity that I get into the higher price brackets for electricity usage. But those higher brackets are absolutely brutal and really make SoCal the best place in the nation to install solar power. Lots of solar radiation and high utility rates.

You use a lot of A/C in San Diego? It is rarely needed in Santa Barbara.

Bob Badour said at November 26, 2009 6:11 PM:


You are misusing the average monthly cost and the minimum daily load. My current bill shows a flat service fee of about $27 per month plus a usage charge of just over 14 cents per kWh. My November bill averaged 26 kWh per day for 32 days. May and June are my lowest load months with something like 17 hours of daylight each day reducing lighting costs, no heating and no cooling. July and August show an extra kWh per day probably due to drawing more water from the well in July and turning the lights on more in August.

By January, my electricity consumption climbs to 30 kWh per day or more with 16 hours or so of darkness each day and the blower on the wood furnace running overtime.

Ironically, I never use so much electricity that I get into the cheaper price bracket for electricity usage (11 cents per kWh).

KMarx said at November 26, 2009 6:15 PM:

My house in NC is a bit over 1,100 square feet, it has some insulation, circa-1984 double pane aluminum framed windows, electric heat pump (replaced a few years ago, with one that has average efficiency) and my electric bill rarely touches $100/month. Most months it is around a dollar a day, which includes running power tools in my home based workshop.

It would be nice if the place was more efficient, if the windows were low-e with vinyl frames, if my fireplace had an insert instead of just being a fireplace, but given how much I spend, currently, I could hardly justify expensive upgrades.

Now, if I can get the government to do the job, and pay my mortgage, I will definitely sign up for that.

GMoney said at November 26, 2009 7:08 PM:

I live in a 1 1/2 story, 1500 square foot house built in 1943 in the middle of Canada. Our January and February temps are routinely -30 C / -22 F (or colder).

Our monthly natural gas and electricity bills are about $260 combined ($150 gas, $110 electricity).

We have a high efficiency, forced air, natural gas furnace. It's rated at 94% AFUE, and I paid about $3800 in 2005 to replace a 1960-something low-efficiency model (probably running around 50%-60% AFUE?).

Everything else is electric: hot water, clothes dryer, front-load washer, and an outdoor hot tub we keep running all year (101 F in the winter, 95 F in the summer).

The house has new windows and doors (last year) and upgraded attic insulation (in the main attic only - 1 1/2 story houses have a lot of knee walls and hard to insulate places in the roof which haven't been done).

I've seen inside the walls during renos. They're full of bats of rockwool insulation from the 40's...which is apparently pretty good. We have some neighbours down the street in older houses with horse hair, shredded newspapers, straw...apparently anything that would burn like hell was the order of the day.

Electricity here is around $0.06/kWh. Natural gas (including transportation/distribution charge) was about $0.43 per cubic meter last winter. In January, we burned through 2,051 kWh in 35 days (58.6 kWh per day) and 666 cubic metres of natural gas in 63 days (about 10.6 cubic metres/day).

The biggest efficiency gain was that new furnace. The windows and doors were mostly for comfort, although they probably contribute a little.

If you're starting with a single-pane, completely uninsulated house, then maybe $20,000 will buy you enough low-hanging efficiency fruit to pay off in 10 years.

hamerhokie said at November 26, 2009 7:47 PM:

In the mid-80s Amory Lovins started touting a housing construction spec that went like this: 1 foot thick insulated walls, 2 foot thick insulated attics, sealing/wrapping/caulking to eliminate convection losses, air heat exchanger to keep air fresh. The result was a house that behaved like a cave, essentially. Temperature would have a steady state at whatever the below-frost depth temp was (in my area it would be around 55 deg F). Heating and cooling costs would be minimal. Needless to say it never caught on - mostly due to cost/benefits (he claimed it increased construction costs by 25%) with the costs being borne by the builder. (Also didn't account for dehumidification in humid climates.) He never published a remodeling spec, although I guess you could pull it off in an existing home.

Texas said at November 26, 2009 8:00 PM:

I live near Houston, 2 story house, 11 year old, with about 2800 sq ft.

Gas (water heater, winter heat) runs about $500 a year, $20 in the summer to about $100 in the winter.

Electric was 22,600 KwH in 2007, for about $3500; $150 to $470 monthly range.

Had attic interior radiant barrier installed, and added 6" insulation. Cost about $2K. No change that I could see in usage.
Put a wireless thermometer (about $20) in the attic, and was seeing temps of 120-130 in summer after radiant barrier.

Replaced A/C units (12 SEER) with high-efficiency 21 SEER. Cost about $20K. Replaced roof (due hurricane damage), and
added ridge vents (basically holes cut in the top of the roof). Attic temp this summer rarely over outside ambient, and then only a few degrees.
Power consumption now appears down about 40% vs. before both upgrades. Big difference in the summer.

I figured the payback on the A/C is about break even over 20 years. In part it was an inflation and energy price hedge. I suspect that the ridge vents,
which I think could have been done for a few hundred bucks, are the highest ROI. New houses here seem to have them.

Wm White said at November 26, 2009 8:51 PM:

Here's a suggestion for real savings: defund all projects at ORNL, JPL, NASA, Los Alamos and LLRL not directly involved in weapons development, space exploration and nuclear energy. All of these laboratories have strayed far from original remit and should be for the most part dismantled. The talented people among them can find employment in private industry and the rest of them should find something to do that does not infringe on the way we civilians try to lead our lives.

Bill said at November 26, 2009 8:55 PM:

My house (Stucco on wood frame) in Tampa, Fl. built in 1983 is about 1400 sq ft heated/cooled. I use under a 1000 kw hrs per month in the summer and 500 kw hrs in the 'winter'. Don't use the heat pump operation during winter and set the AC for 80 in the summer. I have levelized billing of about $85 per month.
The original AC was replaced five years ago with a seer 13 unit $3500. This month I replaced all the original windows with tinted double glazed ones. The windows were rather large 4x6 and $550 per window. If there are any savings with the new windows I won't know until summer (in Tampa that's probably from early May until late October.)
Ryan Homes was the builder and touted it as energy efficient(for 1983). I have no complaints with their boast.
I did plant two live oak saplings in 1993 now they are 35 ft high with a limb span of about 50-60 ft.

p.s When the original AC broke --in the summer of course I just wanted it fixed NOW with no thoughts about return on investment.
I did look at the higher seer models but the extra cost would not would not match the savings for a long time.

David said at November 26, 2009 9:43 PM:

House in Chicago: 1100 sq ft, built 1895, wood frame & siding, not brick. Maximum bill in winter, gas and electric: $160/month. Maximum bill in summer (A.C.): $110.

Current house in California: 1750 sq ft, built 1922, wood frame with stucco. Maximum bill period, gas and electric: $60/month, and this is with some of the highest electricity rates per Kwh in the country. We do have all new appliances though.

David in San Diego said at November 26, 2009 10:13 PM:

What bothers me about this discussion:

"The home selection process is yet to be finalized, and homeowners will have to pay most of the costs..."

from the main article.

From Dan:

"...the payback time is down to 8 years due to subsidies..."

Both ignore that great economic statement from the late Milton Friedman:

"There is no such thing as a free lunch."

The rest of us has to pay for those costs that Mr. Christian glosses over and that Mr. Parker does not take to task. Since this is a Federal Government program (the N in ORNL stands for National) the rest of those costs are being paid by Treasury. And the Treasury gets that money from us, under the threat of confiscation and/or imprisonment.

Dan, where do you think those subsidies are being made up from? From the rest of us great unwashed who may not have the ability to make that improvement even with the subsidies. And who will make up those subsidies when the rest of us get to the point of making the improvements? Either you start paying for it to help me (so much for that subsidy) or I wind up at the wrong end of the Ponzi scheme

Can improvements be made to increase efficiencies? Yes. Should we subsidize them (that means all of them, not just the test models)? Possibly (Let the debate begin). But shouldn't we talk about these improvements at their full costs, instead of deluding ourselves that the subsidized costs will be made up by Deus Ex Machina or Manna from Heaven?

Dave said at November 27, 2009 12:47 AM:

Imagine a 2300SF poorly maintained 60's brick house in the midwest with the same 60's windows. Kids leave doors open and randomly open and close windows. Kids also sometimes take hot 45-60 minute showers. Parents like it 66 or 67 in the summer because they're fat and fat people don't like to be hot.

In the cold midwestern winter, the old rarely serviced furnice is supplimented by space heaters.

Total gas and electric usually exceed $500 a month in the summer and winter.

This was my childhood in the early 90's, and that $500 is not adjusted for inflation. Maybe $750/mo now?

People who read futurepundit and know what compund interest and "12 SEER" means generally will not live in the houses where there is energy efficiency long hanging fruit!

K said at November 27, 2009 4:20 AM:

I agree with Texas that hedging against rate increases is a wise move for the homeowner now. For that reason I am modifying my home near Phoenix a little. That will mean triple-pane windows for me and looking at newer A/C. The attic may get more ventilation if a study indicates that is worthwhile.

Solar will, I suspect, be a better buy for 2011. Production costs are declining and panel production capacity is still increasing.

Inflation is sending mixed signals. Utility rates are slowly but steadily rising. But the costs of hard goods such as those triple-pane windows and A/C units are steady or falling very slightly. So is the cost of labor to install them. For the last couple of years the US has been in deflation for hard goods and labor. I doubt that can last.

In theory a subsidy program to retrofit a few million homes is a winner as stimulus. The money is spent in the US and the benefits accrue in the US. And on the scale of our budgets today the money isn't that much. $20,000 for ten million homes is $200B. Nice pocket money but hardly awesome when budgeted across two to four years.

The thing that worries me about another big subsidized program is the likely fraud. I am not sure how much work would be done v. how much would be paid for. Contractors will be able to do crappy work, or not do it at all, sign papers, and money will flow from Washington or China or where money comes from these days. There will be thousands or millions of homeowners who have no idea or way to evaluate the quality of the work done. Building inspectors will look the other way and end up richer for it.

Dan said at November 27, 2009 8:18 AM:

I agree completely; the subsidies for solar power completely distort the market, and my panels were half-paid for on the backs of other taxpayers. That said, very little of the US tax base actually comes from the "unwashed" masses. Most comes from the wealthy & Corporations .... and solar subsidies are small-potatos when it comes to Gov't-induced market distortion. An open question (I don't know the answer): If it were not for the govt-mandated electric rate structure which subsidizes small users at the expense of the typical user, would there even be an economic case for my installing solar panels. i.e. in my case, solar power only "pays" for itself because it allows me to stop paying subsidies to other electricity users....

I live costal and don't have A/C. For the folks who live inland of I-15, it is a necessity.


morpheus said at November 27, 2009 10:05 AM:

looks like the pricks who run this site had there heads up there asses since last week

couse they didnt heard that global warming scam has been proven

to be just that a scam

here is the video link to get all priks and deniers up to date


on a second note this article is owsome showing what people would have to pair becouse of global warming hoax

check link


Engineer-Poet said at November 27, 2009 11:08 AM:

Please tell me how "Climategate" eliminated the open water at the North Pole, the dying pine forests along the Rockies and into British Columbia (from pine beetle infestations due to too-warm winters), the drought in Australia, and the ice losses in Greenland and Antarctica.

I'm sure the CRU faked the ice-free northwest and northeast passages and the guy who swam at the N. pole two years ago.  Oh, and I'm the King of Siam, and I have this bridge I'd love to sell you.

M. Simon said at November 27, 2009 2:10 PM:

Renters are screwed.

M. Simon said at November 27, 2009 2:15 PM:

Please tell me how "Climategate" eliminated the open water at the North Pole, the dying pine forests along the Rockies and into British Columbia (from pine beetle infestations due to too-warm winters), the drought in Australia, and the ice losses in Greenland and Antarctica.

Ah. But that proves nothing about the cause. And given that the MWP was equally warm or hotter all the above may just be caused by natural variation.

Randall Parker said at November 27, 2009 4:30 PM:


I like how well you play the obnoxious asshole. You don't lead people astray. You get right to the point.

Did you know there are lots of studies about global warming that I do not post about? I haven't posted about the recent report on the decreased rate of ocean uptake of CO2 or the recent reports on faster ice melting in Antarctica or faster ice melting in Greenland. Think I've been shielding my readers from the truth?

You can't take the absence of a post by me on one event on one subject as meaning anything. This is especially the case on subjects that are not my top concerns. I'm way more worried about Peak Oil than about Global Warming because the big economic contraction due to Peak Oil come first. I'm especially interested in advances that bring us closer toward rejuvenation therapies. But I haven't posted on some interesting recent reports about stem cell treatments.

adam said at November 27, 2009 8:43 PM:

I did some research on mud construction this summer as part of an anthropology simulation at ANL, and part of my reading was Glorious Mud! by Van Beek. At one point they measured the internal and external temperature in two buildings that were right next to each other, one a modern concrete home that was typically air conditioned during the summer, and the other a mud house. Both buildings were left unheated and uncooled for the day. The outdoor temperature varied from 59F to about 95F. The indoor temp of the concrete home varied from about 70F to over 100F. The mud home stayed between 70F and 80F the whole day.

He also cites thermal conductivity measurements from Hassan Fathy's book showing mud brick conducts half the heat of fired brick and nearly one quarter of the energy conducted by concrete in the same period of time. If we want to lower heating and cooling costs for new homes, switching to earth construction seems like a good idea. It has several other benefits and several drawbacks. The biggest problem I'm aware of is that there aren't many experienced mud masons in the US and Europe, but if you live in New Mexico or southern California you can probably get a decent, modern mud home that will stay cool without much AC.

Doc said at November 28, 2009 10:11 AM:

The greenies think that utilities buying solar power (SREC's) at 50 cents/kwhr is a great idea.
Compare to coal or nuclear at 1.4 cents/kwhr.

If they get their way, imagine electricity going from 7 cents/kwhr to $0.70 cents... or higher.

When your $200/month electric bill zooms to an impossible $2000, those outrageous retrofit costs will seem more reasonable.

Sure, it's insane, but it's the way ideologues think and do "economics".

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